Fixed Deposits

Fixed Deposits mobilized by companies are governed by the provision of Section 58-A of the Companies Act 1956. The Fixed Income instrument provides Fixed/committed return on the amount invested and is the most convenient investment options to all investors. Fixed Deposits can be classified into deposits received from

Manufacturing Companies ( Non Banking-Non Finance Companies)
Non Banking Finance Companies (NBFC)

How to choose a good company

The company should be in operation for atleast 10 years
The company should be a Public limited/Government company
The company should be a prior maturity and dividend paying company
The company should have known/established management
The company should have a track record in all aspects
The company should offer reasonable rate of interest

Manufacturing Companies

Manufacturing Companies are permitted to mobilize deposits from the Public up to 25% of their net worth and up to 10% from their ShareHolders.
They can accept deposits for a Minimum Period of 6 Months and a Maximum of period of 36 Months.
Interest will be paid on Monthly, Quarterly, Half-yearly, Annually & on Maturity. (cumulative).
Investor can withdraw the deposits before the maturity. In this case he gets the interest till date, but less penalty which is usually 1% or 2 %

Finance Companies

Finance Companies are permitted to accept deposits based on their credit rating issued by any of the agencies like CARE, ICRA,CRISIL and FITCH.
They can accept deposits for a minimum period of 12 months and a maximum period of 60 months
Interest will be paid on monthly, quarterly, half-yearly, Annually & on maturity. (cumulative).
Deposits with highest /high rating companies are safe. They may offer an Interest rate between 9 % & 11%.
Investors can avail a loan up to 75% of the amount invested and also allowed Premature withdrawal

Advantage	Disadvantage
Variety of Deposit Scheme to Suit individual needs.	Deposits are unsecured
Reasonable Return
Liquidity
Moderate Safety
Good Service & Response

Tax Details
No tax will be deducted at source on Interest Income up to Rs.5000 p.a

For any query, please feel free to contact us.